Reports: Medicare Paid $120M In Illegal Care

MIAMI (AP) — The taxpayer-funded Medicare program paid more than $120 million from 2009 to 2011 in violation of federal law for medical services for inmates and illegal immigrants, according to two reports issued Thursday by federal health officials.

Under federal law, Medicare generally does not pay for services for either group of patients. But the program was billed for more than $33 million in inmate care and more than $91 million for illegal immigrant care over that period, according to the reports from the Department of Health and Human Services inspector general.

In 2011, Medicare expenditures were $549 billion, making Thursday’s figures a fraction of the program’s annual budget. But the reports come as the Obama administration and Congress look for savings in a lean budget year. Putting a dent in Medicare fraud, estimated at $60 billion a year, has the potential for major savings.

The reports recommend that federal health officials establish a better system to automatically flag charges for inmates and illegal immigrants to stop illegal payments before they are made.

The Centers for Medicare and Medicaid Services already had a system in place to do so, but the reports found that the system didn’t catch improper bills until they had already been paid. The reports also noted that the agency didn’t instruct its contractors to try to recoup the lost funds.

The agency agreed in the report that the system needs to be improved. In April, Medicare is launching a new process to help detect and recoup money lost from claims that already have been paid.

The Centers for Medicare and Medicaid Services has already been using a new, highly touted $77 million technology system since 2011 designed to stop fraudulent payments before they are paid.

But lawmakers have been skeptical about the effectiveness of the system, and federal health officials have said they are still working out kinks. Still, initial reports in December showed that the system has saved about $115 million and spurred more than 500 investigations, according to federal health officials.